Wednesday, 24 July 2024

AIBANK’s differentiated positioning focuses on the financial needs of new citizens

5 min read

There is huge development potential in inclusive finance in the Chinese market, one that shares characteristics with new-citizens who are not effectively served by traditional financial institutions

With China’s economy gradually shifting from being investment-driven to consumption-driven, consumer finance has a high potential for development. However, at present, consumer financing demand has not been met for a large portion of the long-tail population in China, mostly made up of new citizens. 

According to a survey conducted by the Chinese Academy of Social Sciences, new citizens have a relatively low income level. Almost half of the respondents have an average monthly income of RMB 4001 to 5000 ($571 to $714), traditionally regarded as long-tail customers.

The comprehensive contribution of this customer group is low, but the human operating cost of service is high for traditional financial institutions, which means they do not actively reach out to this segment of customers.

AIBANK took serving the long-tail customer segment as its market-entrance strategy, focusing on the financial service needs of new citizens around entrepreneurship and employment, housing, education and training, as well as medical care and pension services. Through digital financial services and innovative products that are purely online, unsecured, and easy to access, AIBANK effectively provides new citizens with simple, convenient, and reliable inclusive financial services.

By 2022, the total number of new-citizen users of AIBANK reached 46 million, accounting for more than half of the total customer base. The service covers credit, consumer finance, wealth management, payment, and other multiple scenarios.

Urbanisation level to reach 70% by 2030

In the context of new citizens, the subject often turns to China’s urbanisation process. Since China’s reform and opening-up, economic and social development has driven industries, capital, technology, and talent to pool in cities.

The development of cities requires labour for production and services and this sees large numbers from rural populations transfer to urban areas. According to the statistics of the World Bank, China’s urbanisation rate has continued to grow at an average annual rate of about one percentage point from 17.9% in 1978 to 62.5% in 2021, 3.5 times that of 1978. The World Bank also predicts that by 2030, China’s urbanisation level will reach 70%.

It is estimated that there are 300 million new citizens, accounting for 21% of the total population of the country; one in every five individuals in the urban population is a new citizen. In tier-one cities like Beijing, Shanghai, Guangzhou, and Shenzhen, the statistics will likely be higher.

On 4 March 2022, the China Banking and Insurance Regulatory Commission and the People’s Bank of China (PBoC) jointly issued the Notice on Strengthening Financial Services for New Citizens. It defines new citizens as “all kinds of groups who have come to cities and towns for permanent residence for their own reasons, such as entrepreneurship, children’s schooling, and reuniting with children”.

The notice also emphasises the need to improve the availability and convenience of financial services for new citizens.

AIBANK has accurately judged the huge development potential of inclusive finance in the Chinese market beforehand. Since its establishment, AIBANK has served long-tail customers. This customer group coincides with the characteristics of new citizens. It is not easy for traditional financial institutions to serve this market adequately. They face many challenges in terms of customer acquisition, risk control, and operating costs, among others.

AIBANK, however, relying on its original digital-bank gene and its leading capabilities in financial technology and open banking, has provided excellent models of digital financial services for new citizens in the industry.

Financial technology bridges credit data gap between new citizens and financial institutions 

Information asymmetry has been one of the long-standing, main obstacles restricting new citizens from obtaining financial services from traditional financial institutions. Compared to urban residents, new citizens bear characteristics such as large population mobility, flexible employment, and a lack of effective collateral, resulting in incomplete credit data or no credit data. It is difficult for financial institutions to fully understand their credit status through traditional methods, limiting the range of financial services available to them.

New citizens have a large amount of valuable information available, albeit fragmented and scattered in different industrial entities and jurisdictions, forming data silos. This information includes data accrued from sources such as bills, e-commerce transactions, medical insurance and property in their hometowns.

Safely getting the information across regions, industries, and departments, so that data elements can eventually be transformed into assets, will enable financial institutions to better serve this target market.

By using artificial intelligence, big data, application programming interface (API), and other technologies, AIBANK has been able to break through the credit data silos of new citizens. Externally, it cooperates with platforms such as Baidu, iQIYI, Xiaomi, and that have many users and multi-dimensional scenarios. While embedding financial products and services into the external ecosystem, it depicts user portraits through multi-dimensional data with user authorisation.

To ensure data security, AIBANK has developed a privacy computing platform to effectively control data abuse through authorisation, tamper-prevention, and other means, ensuring both the availability and invisibility of data in the process of circulation and integration.

Internally, a cloud-based financial information system infrastructure has been established to support a powerful data platform. All kinds of data, including behavioural, transaction, and log have been connected around customer core data, to realise the segment-level application of full-around big data user tags, and effectively solve the problem of the lack of credit data.

Solving the problem of information asymmetry for new citizens requires the participation of all stakeholders. Regulatory authorities have played a positive role—within a few months after the issuance of the notice, 22 regional banking and insurance supervision bureaus, together with relevant provincial (district and city) officials, issued special support policies for new citizens’ financial service needs.

Specific measures were put forward to solve the problem of information asymmetry. For example, the Beijing Banking and Insurance Regulatory Office, in conjunction with eight government departments, has taken the lead in establishing the first provincial comprehensive financial service network in China, gathering information and data on provident fund, civil affairs, social security, medical insurance and real estate, amongst other areas, to achieve the sharing of regulatory and government data.

Shandong Banking and Insurance Regulatory Bureau guided banking institutions to explore and build a ‘three-place linkage’ mechanism for new citizens’ registered residence, present residence, and workplace to realise cross-regional information sharing; Jiangsu Banking and Insurance Regulatory Office encourages financial institutions to make full use of platform transaction data such as online car-hailing, e-commerce and express delivery to help identify the credit risk of flexible employment groups on the platform and improve their loan availability.

Admittedly, information asymmetry is a major bottleneck in serving new citizens but as the credit data gaps are filled and the question of ‘who’ the customer is can be resolved, the real challenge for financial institutions is to answer the following three questions: where are the customers, how can we transform them, and how do we operate them? 

AIBANK efficiently uses open banking to acquire new citizen users 

While there is a large number of new citizens, factors such as population mobility, flexible employment, and limited financial literacy mean they rarely actively seek services from financial institutions, which in turn makes it difficult for financial institutions to acquire customers through offline traditional ways such as business-to-business (B2B) cooperation and branch walk-ins.

On the other hand, new citizens are predominantly millennials and Gen-Z, and their user behaviour mainly occurs online and on mobile terminals. This can be seen from data released by Alipay that reported: “During the Double 11, the number of new citizens using consumer financial services in various consumption scenarios through Alipay accounted for 59% of the active users of Alipay on that day”.

Online and batch customer acquisition has become the first choice of financial institutions. To achieve this, financial institutions have higher requirements on their understanding and capabilities in API technology or open banking.

AIBANK has long embraced the concept of open banking. As a digital-only bank, it does not have offline outlets. It relies on online scenarios to embed financial services into the external ecology, that AIBANK calls digital branches. To connect with external partners more efficiently and safely, in 2018, it built the AIBANK Inside open banking platform as the unified entrance to its financial open ecology.

Once the financial services get decoupled and cubed through standard microservices, they are embedded into scenarios with external partners through API. So far, more than 100 partners, including Baidu, iQIYI, Xiaomi, and have been connected, and over 3,000 API interfaces released, including payment, bill collection, asset management, custodian, consumer finance, financial management, deposit, and many other financial fields. 

The AIBANK Inside open banking platform is one of the first projects selected for PBoC’s pilot financial technology ‘regulation sandbox’ innovation project in 2020. 

AIBANK’s digital marketing platform enables precise matches to new citizens’ personalised financial needs

AIBANK began to think about how to retain new customers. The demographic of new citizens spans differences in age, education, income, work, family, and other aspects, and their demand for financial services is equally diverse.

The regulatory notice requires financial institutions to improve the equality and convenience of financial services in response to the financial needs of new citizens in key areas such as entrepreneurship, employment, housing, education, medical care, and pensions.

AIBANK Inside aims to solve the puzzle of accurately matching relevant products, services, and marketing activities according to the personalised financial needs of new citizens, and effectively reach them through channels to achieve customer-centric digital-precision marketing.

While achieving precise customer profiling, the platform leverages a real-time computing engine embedded in its big data platform for real-time analysis and processing of user data. Within 30 seconds, the system can complete user behaviour perception, analysis and decision- making, as well as implementation and disposal.

The credit product Hao Hui Hua, for example, effectively improved the business pass-through rate and reduced customer complaint through platform empowerment and providing customers with real-time online services. 

Intelligent man-machine customer service improves digital financial service experience 

While this target market is increasingly transitioning to digital financial services, the traditional voice services typically available to customers has low product coverage and accuracy, and this does not adequately address the needs of a large number of long-tail customers. The customer experience needs to be improved.

AIBANK leveraged a ‘man-machine coordination’ capability empowered by an intelligent customer service system that tackles pain points very well. The project enables intelligent customer service to answer users’ questions more quickly and comprehensively by data sharing across intelligent customer service and other business systems.

It improves the accuracy of robotic automatic speech recognition and natural language processing through continuous iterative training, and at the same time, empowers chatbots with real-time decision-making results derived from the digital marketing platform and greatly enhances chatbots’ active service capability.

By 2022, AIBANK’s intelligent robotic service accounted for 60% of total customer service, providing simple, convenient, and highly interactive channels of communication for new citizens.


Jointly established by stated-owned China CITIC Bank and Chinese search giant Baidu, AIBANK was the first digital bank that was granted a direct banking business license. It focuses mainly on consumer lending, small and medium-sized enterprises, auto finance and wealth management, and provides digital financial services purely online by leveraging artificial technologies, big data and cloud computing.

By the end of 2022, the total assets of AIBANK reached RMB 96.92 billion ($13.8 billion) and total number of users had exceeded 83 million. In the 2022 Global Digital-only Bank Ranking released by The Asian Banker, AIBANK placed 12th globally and sixth in Asia Pacific.


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